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Published: Friday, December 29, 2017 @ 10:59 AM
There are several steps you should take to get out of credit card debt. Paying off credit card debt that’s several thousand dollars or more takes time, so you must discipline yourself.
I usually find setting a goal of paying down debt in 36 months or less works best for people. If the end goal is any further out than that, people tend to lose their focus.
RELATED: 7 things debt-free people never do
Once you decide to make your debt a priority, you need to start paying more than the minimum monthly payments. That will allow you to eliminate the debt faster, save money on interest — and most importantly, stay motivated to get the job done and behind you!
Most people only pay the minimum on their credit card bills each month when they could actually afford to pay more. Your statements make the minimum amount very clear, so that’s what most people focus on.
But there’s a better strategy you should consider.
Take a look at your monthly statement, and instead of focusing on the minimum payment, pay attention to the box that shows how much you need to pay each month to get the debt wiped out in 36 months. When you give yourself a shorter time period, your progress is tangible – so you can actually see your debt significantly decreasing as the months go by.
Laddering is your friend: If you have several cards, your first goal is to pay off the card with the highest interest rate. This process is called laddering. Pay more money toward that credit card and slightly less toward the other cards, until the card with highest-interest debt has a zero balance. Then you move onto the next card, and so on and so on. Resist the temptation to close the account when it’s at a zero balance. Doing so will only hurt your credit score.
Use the calendar to your benefit: One proven way to pay more toward the card with the highest interest rate — and to get rid of it faster — is to make a separate half-payment every 14 days to the credit card company. Mark your calendar every 14 days and write that check or send your online payment that day. Making a half-payment every 14 days equals one extra month’s payment you’ve made at the end of the year. Work these payments around your statement cycle to avoid paying late fees.
Forget about debt-settlement firms: If you watch bad late night TV, you’ve probably seen those ads being run by the debt-settlement outfits. Their promises scream out in the night about reducing your outstanding debt to just pennies on the dollar without making you file for bankruptcy — no matter how much outstanding debt you have.
That promise, however, is just an illusion. The debt-settlement firms’ typical modus operandi goes like this: You pay an upfront fee to them, plus a monthly retainer. They then tell you to stop paying on your bills, stash the money you would have used to pay bills into a bank account and just sit on it. The idea is to make the credit card companies so desperate that they’ll cry uncle and want to settle with you at a reduced rate. The reality, however, is that too often you wind up just damaging your credit.
In the worst-case scenario, some people complain that the more unsavory players in the debt-settlement business will take your upfront fee and first month’s retainer and then put you on ignore when you try to initiate further contact with them. Beware! It’s so easy to want to believe that somebody has a magic bullet to solve all your problems. But that’s simply not the case.
Get help from a legitimate source: Get in touch with the National Foundation for Credit Counseling (NFCC) at NFCC.org or call 1-800-388-2227 to find a local affiliate office near you. NFCC affiliates offer free or low-cost debt counseling. About one in three of NFCC clients just need some budgeting help to get their lives back on track. Beyond simple budgeting, they can also get you set up on a hardship debt-management plan (DMP) if you qualify.
See if you qualify for a hardship DMP: In the case of a hardship DMP, lenders agree to modify the terms and conditions of their repayment policies. That means they may waive late and over-the-limit fees, in addition to reducing interest rates. They will not, however, agree to a reduction of your outstanding balance. But it could be worth a look if you meet the eligibility requirements. Get in touch with a local affiliate of the NFCC today to find out.
Additional resources: You may also want to check out the book Invest in Yourself: Six Secrets to a Rich Life by Marc Eisenson, Gerri Detweiler and Nancy Castleman.
Good luck to you in paying off credit card debt!
Published: Wednesday, December 13, 2017 @ 10:32 AM
— It's that time of year again when parents and college or college-bound students fill out the FAFSA (Free Application for Federal Student Aid).
The idea of wading through a form – especially one that requires financial information – is definitely not an appealing idea, but the FAFSA could be a tremendous help in getting your student money to attend college.
The following points are what you need to know, as well as common mistakes to avoid when filling out the FAFSA.
Fill it out – you have nothing to lose.
You may think that you don't need to fill out the FAFSA, especially if you believe you might not qualify for need-based aid. But there's no income cut-off point with federal student aid, according to the U.S. Department of Education. In addition, the FAFSA can help you qualify for all kinds of grants, loans and scholarships, including those offered by your state, school or private organizations.
By investing a few minutes of time, you could reap thousands of dollars in potential rewards.
Submit it ASAP.
The sooner you submit your FAFSA, the better, according to consumer adviser Clark Howard. Although the federal deadline isn't until June 30, 2018, you should check with the financial aid administrator at colleges you're interested in to make sure their deadlines aren't earlier.
Submitting earlier will help you plan how you'll pay for college. You'll also have a better chance of getting as much aid or scholarship money as possible since some colleges distribute their available money on a first-come, first-serve basis, Howard says.
Gather the information you'll need.
The FAFSA asks questions about the student as well as his or her parents if the student is a dependent.
You'll need the following information on hand as you fill out the FAFSA:
Watch out for common mistakes.
The National Association of Student Financial Aid Administrators points out some common mistakes that can delay your form's submission or cause you to not get the aid and scholarships you might qualify for. They include the following:
Keep an eye out for requests for more information.
Your FAFSA may be selected for verification, which means you'll have to provide some additional or supporting information, U.S. News & World Report explains. This process doesn't necessarily mean you've done anything wrong. You may have a discrepancy or mistake on your form, but some FAFSAs are just randomly selected for verification (lucky you!).
Published: Wednesday, November 22, 2017 @ 12:01 PM
— With the recent massive security breach of Equifax — one of the three credit bureaus with which many may have thought their private information was safer than most — now many people are dealing with more insecurities, wondering where they can entrust their private information, if anywhere.
Here are some options:
Better and cheaper than credit monitoring, an option for optimal security is freezing your credit through each of the three credit bureaus (Experian, Equifax and TransUnion), according to WSB money expert Clark Howard at Clark.com.
The fee is $3 to $10 per person per bureau, depending on your state, to allow you to seal your credit reports — except now it's free with Equifax from here on out due to the recent data breach.
You will be provided with a personal identification number (PIN) that only you know and can be used to temporarily unfreeze (or "thaw") your credit when legitimate applications for credit and services need to be processed such as when you are buying a car.
This added layer of security means thieves can't establish new credit in your name even if they are able to obtain your personal information.
LifeLock vs. CreditKarma.com
While LifeLock advertises it can help consumers secure their information to guard against identity theft, LifeLock charges monthly services that start at $10 a month.
This kind of credit monitoring is not the same or as effective as a credit freeze, said Craig Johnson for Clark.com.
Instead, he recommends CreditKarma.com for free credit monitoring.
If you haven't already frozen your credit, now would be the time since Equifax recently got hacked and the information of possibly 145.5 million people was attained by these hackers.
Information accessed primarily includes names, social security numbers, birth dates, addresses and, in some instances, driver's license numbers.
To try to compensate, Equifax is offering free identity theft protection and credit file monitoring (but only through Jan. 31, 2018) with its TrustedID Premier.
Another point of confusion is the unsolicited free Dark Web Email Scan offered by Experian to your email, leading to a monthly fee for further scanning.
Experian IdentityWorks also offers a free 30-day trial membership for identity theft protection and resolution, involving a monthly automatic deduction of $9.99 for the plus plan or $19.99 for the premium plan.
It's free to cancel within the 30-day trial period, but the consequences are not revealed up front for those who decide to cancel their membership once the monthly fees begin.
Published: Friday, November 17, 2017 @ 4:17 PM
— Your house is a large expense with many associated costs like a mortgage payment, insurance, maintenance and more.
It provides a roof over your head, of course, but since it usually costs you money each month, why not put it to work for you and earn some cash in the process?
The following are four ways your house can make you money:
List your home with Airbnb or VRBO.
If you're planning to be out of town for a few days or don't mind bunking with a friend, you may be able to make some money by renting out your home through sites like Airbnb and VRBO.
Before jumping in, you'll need to take time to learn about the market, your expenses and any taxes you may need to pay. And before you list your property, you'll need to understand how to make it stand out with a good listing, including compelling photos and competitive pricing. Airbnb has a series of toolkits to help with this.
Rent it out to the area's growing TV and film industry.
When TV, film and commercial producers want to depict a home on screen, many times they'll rent the real thing, according to Money. It can be inconvenient for owners, however, since their homes may be taken over by a large crew and be completely rearranged.
On the other hand, homeowners often have fun with the experience while making some extra money. And while you're watching TV or a movie, you may be able to spot your home.
Host a foreign exchange student or faculty member.
Temporarily hosting a foreign exchange student or faculty member who's studying or teaching in this country can help you make some extra cash for anywhere from six weeks to six months at a time. You'll also be exposed to a different culture and language, and the experience could help you form a bond that lasts even when your guest returns home.
The Penny Hoarder suggests contacting student housing offices at local community colleges and universities, asking to be placed on their list of host families. After this, you'll have to apply, be interviewed, and allow your home to be toured. You'll also need to pass background and reference checks.
Rent out your driveway or storage space.
If you have extra space in your driveway, you may be able to make some money by letting others park there, according to Men's Health. This is especially true if you live near a commuter rail line or sports stadium, but you'll need to check to make sure you're not violating any local ordinances. Check out websites like JustPark to get started.
Published: Tuesday, November 14, 2017 @ 3:15 PM
— Health insurance has a large impact on your finances, so it pays to get the most out of your plan.
Understanding its ins and outs can be confusing, but it's worth your time to check on benefits you could be losing out on or mistakes that could cost you money.
Choose your plan carefully.
When it's time to renew your health care coverage, consumer adviser Clark Howard recommends not just blindly signing up for your current plan, even if you've been happy with it.
Your plan – as well as other options you may be able to sign up for – may have changed. Take a close look at the co-pays, deductibles, in-network providers and other specifics to make sure you're making the best possible choice.
Take advantage of preventative care benefits.
Almost every plan, according to healthcare.gov, offers preventative care benefits that are free. You won't have to pay a co-pay or meet your deductible to get these services at no charge.
Services for adults include age-appropriate vaccinations and colorectal cancer screenings for patients over 50.
Work within your formulary.
Health care plans typically have a formulary, which is a list of medications that they're willing to pay part of or the entire cost of. It may include a list of preferred medications, for which it will pay the highest percentage of the cost.
It pays to be familiar with your formulary before you get an unpleasant surprise at the pharmacy, according to NerdWallet. Print out a copy of the document from your health insurance company's website, or call up an online copy at your doctor's office. Your doctor can work with you to make sure you get an effective medication that you can afford.
Utilize HSAs and FSAs.
If your health insurance plans allow you to put aside tax-free dollars in a Health Savings Account (HSA) or Flexible Spending Account (FSA), you should learn how they can help you. Consumer advisor Clark Howard's website, Clark.com, has a chart that explains the pros and cons of each.
An HSA is usually associated with high-deductible plans, and like an FSA, it helps you save money to pay for health care expenses. These can include everything from prescription eyeglasses to medication.
Watch out for surprise out-of-network charges.
Your insurance plan has a list of network providers, and when you can, you should stay in-network. That's easy enough if you're visiting a single doctor, but if you need to have surgery, things can get more complicated.
For pre-planned surgery, Consumer Reports recommends talking with your doctor's billing department to get a list of everyone who will provide your care, including radiologists and anesthesiologists. Call your health care company to see if they're in-network, and if not, ask your doctor if in-network providers can be used.